The foreign investors who own a third of electric-power monopoly UES claim plans for reform are nothing but a rip-off, a “horrible destruction of value for shareholders,” as one of them put it. UES controls about 90 percent of Russia’s non-nuclear electric power generation and distribution. The company owns and operates some power plants itself, but its most important assets are its controlling shares in seventy-three regional power companies, called energos.

The company’s CEO is Anatoly Chubais, usually a Western favorite. Chubais wants to sell off the company’s holdings in the energos and to spin off power distribution to a new state-owned company. The goal is increased competition among power suppliers, who would have nondiscriminatory access to the transmission system. Chubais says Western Europe provides the model for the restructuring, which is already underway in Poland and Hungary in preparation for membership in the European Union.

Foreign investors, who bought into a company they saw as a monopoly provider of a commodity in short supply, see a swindle. In a rising market, the value of their shares has dropped by a third since Chubais’ plans began to leak in late March. Part of the problem is that electricity prices, regulated at the federal and regional levels, are still terribly low, despite having doubled over the past twelve months. Part is fear that in a divestiture, natural-gas monopoly Gazprom, a major UES creditor, will take over the energos in a debt-for-equity transaction, with no cash to UES. And foreign investors worry that the federal government, which controls 52 percent of UES, will respond to every pressure but theirs.

But investor fears, if not exaggerated, seem premature. According to Chubais, implementation of his UES break-up plan would require four new laws, as well as changes in the civil code and other legislation. That seems months, and probably years, away.